1. Lesson 1-1
6/26/2018
“We are what we repeatedly do. Excellence, then, is not an act, but a habit.” Aristotle
LESSON 1-1

2. The Language of Business Lesson 1-1: The Accounting Equation
6/26/2018
Chapter 1 Starting a Proprietorship: Changes that Affect the Accounting Equation
Accounting:
The Language of Business
Lesson 1-1:
The Accounting Equation
Assignment: Read pp 5-7
Objectives:
1. Define accounting terms related to starting a service business organized as a proprietorship and to changes that affect the accounting equation
Identify accounting concepts and practices related to starting a service business organized as a proprietorship and to changes that affect the accounting equation
Classify accounts as assets, liabilities, or owner’s equity and demonstrate their relationships
Analyze how transactions affect accounts in an accounting equation

3. Terms Accounting Accounting system Accounting records
Lesson 1-1
6/26/2018
Terms
pages 6-7
Accounting
Accounting system
Accounting records
Financial statements
Service Business
Proprietorship
Business Entity--
(GAAP concepts in purple)
Terms: Accounting—planning, recording, analyzing, and interpreting financial information
Accounting System—planned process for providing financial information that will be useful to management
Accounting Records—organized summaries of a business’s financial activities
Financial Statements—financial reports that summarize the financial condition and operations of a business
Service Business—a business that performs an activity for a fee—The business in our first section of Accounting is called “Techknow Consulting” and it provides network troubleshooting for customers.
Proprietorship—a business owned by one person (aka sole proprietorship) DISCUSS P 7—ANSWER QUESTIONS ABOUT PROPRIETORSHIPS ON Study Guide 1 p.3. (at bottom) Points for response as well as study guide
Business Entity—when the financial information for a business is recorded and reported SEPARATELY from the owner’s personal financial information
LESSON 1-1

4. THE ACCOUNTING EQUATION
Lesson 1-1
6/26/2018
THE ACCOUNTING EQUATION
Page 8
Asset
Equities:
Equity of those to whom money is owed
Equity of the owner (aka “owner’s equity”)
Liability
Owner’s Equity
All of Accounting is based on the accounting equation: memorize it and it will help you right through college accounting!
Asset: Anything of value that is owned
Equities: Financial rights to the assets of a business
Equity of those to whom money is owed
Equity of the owner
Liability: An amount owed by a business
Owner’s Equity: The amount remaining after the value of all liabilities is subtracted from the value of all assets
Accounting Equation: An equation showing the relationship among assets, liabilities, and owner’s equity
Do:
Work together: p 9 text
Working papers: p 5
LESSON 1-1

5. TERMS REVIEW Review website accounting accounting system
Lesson 1-1
6/26/2018
TERMS REVIEW
page 9
accounting
accounting system
accounting records
financial statements
service business
proprietorship
asset
equities
liability
owner’s equity
accounting equation
ethics
business ethics
Review website
You will need to know ALL of the Chapter 1 terms for our Chapter 1 exam. To help you review/study, we will be completing a study guide, and there are online resources for you to use to study.
Here’s the website:
Ethics: the principles of right and wrong that guide an individual in making decisions
Business Ethics: the use of ethics in making business decisions
DO:
Application Prob. 1-1 Text: p 19
Working Papers: p11
LESSON 1-1

6. How Business Activities Change the Accounting Equation
Lesson 1-1
6/26/2018
LESSON 1-2
How Business Activities Change the Accounting Equation
Terms:
Transaction
Account
Account Title
Account Balance
Capital
Unit of Measurement
US=Dollars, Japan=Yen
China=Yuan, France=Euro
Transaction: a business activity that changes assets, liabilities, or owner’s equity
Account: a record summarizing all the information pertaining to a single item in the accounting equation
Account title: the name given to an account
Account balance: the amount in an account
Capital: the account used to summarize the owner’s equity in a business (in this case, Kim Park, Capital)
Unit of Measurement: this concept is applied when business transactions are stated in numbers that have common values
LESSON 1-1

7. Lesson 1-1
6/26/2018
RECEIVING CASH
page 10
Transaction 1 August 1. Received cash from owner as an investment, $5,
LESSON 1-1

8. PAYING CASH Transaction 2 August 3. Paid cash for supplies, $275.00.
Lesson 1-1
6/26/2018
PAYING CASH
page 11
Transaction 2 August 3. Paid cash for supplies, $
Transaction 3 August 4. Paid cash for insurance, $1,
LESSON 1-1

9. TRANSACTIONS ON ACCOUNT
Lesson 1-1
6/26/2018
TRANSACTIONS ON ACCOUNT
page 12
Transaction 4 August 7. Bought supplies on account from Supply Depot, $
Transaction 5 August 11. Paid cash on account to Supply Depot, $
LESSON 1-1

10. CHECK-OFF FOR CLASS PARTICIPATION
Lesson 1-1
Guided Practice
6/26/2018
DO:
Work together 1-2: Text p 13.
Working papers p 7
OYO 1-2: Text p 13. Working papers p 8
Application problem 1-2: Text p 13.
Working papers p 12
CHECK-OFF FOR CLASS PARTICIPATION
LESSON 1-1

11. How Transactions Change Owner’s Equity in an Accounting Equation
Lesson 1-1
6/26/2018
LESSON 1-3
How Transactions Change Owner’s Equity in an Accounting Equation
Terms:
Revenue
Sale on Account:
aka: “charge sale”
Expense
Withdrawals
Revenue: An increase in owner’s equity resulting from the operation of a business
Sale on Account: a sale for which cash will be received at a later date. Also known as a charge sale (different from VISA or MC)
Expense: a decrease in owner’s equity resulting from the operation of a business

12. Lesson 1-1
6/26/2018
REVENUE TRANSACTIONS
page 14
Transaction 6 August 12. Received cash from sales, $
Transaction 7 August 12. Sold services on account to Oakdale School, $
LESSON 1-1

13. Lesson 1-1
6/26/2018
EXPENSE TRANSACTIONS
page 15
Transaction 8 August 12. Paid cash for rent, $
Transaction 9 August 12. Paid cash for telephone bill, $40.00.
LESSON 1-1

14. OTHER CASH TRANSACTIONS
Lesson 1-1
6/26/2018
OTHER CASH TRANSACTIONS
page 16
Transaction 10 August 12. Received cash on account from Oakdale School, $
Transaction 11 August 12. Paid cash to owner for personal use, $
LESSON 1-1

15. Guided Practice and Chapter Assignment
Lesson 1-1
6/26/2018
Guided Practice and Chapter Assignment
Do: Work together 1-3: text p 17
Working papers p 9
OYO 1-3: text p 17, working papers p10
Application problem 1-3; text p 20,
working papers p 13
Graded assignments for Chapter 1:
Mastery Problem 1-4: text p 21, working papers p 14
Study Guide Ch 1: correct in class
Chapter 1 test: 125 points: terms, T-F, 2 probs.
LESSON 1-1